The United States has imposed sanctions on Gazprombank, Russia’s third-largest bank, along with over 50 other Russian financial institutions, marking a major step to further weaken the Kremlin’s ability to finance its ongoing war in Ukraine. This move comes as President Joe Biden aims to increase pressure on Russia before leaving office in two months.
Gazprombank, a key player in facilitating Russia’s energy exports, was the last major Russian bank to remain untouched by U.S. sanctions until now. Both Washington and Brussels had previously refrained from sanctioning Gazprombank due to concerns that such actions could disrupt energy exports.
In addition to Gazprombank, the U.S. announced sanctions against more than 50 other Russian banks involved in international operations, over 40 Russian securities registrars, and 15 financial officials. These measures are part of a broader effort to further isolate Russia financially.
The U.S. also issued a warning to financial institutions against joining Russia’s alternative to the international messaging system for banks, known as SWIFT. Russia has been trying to attract international banks to join its messaging platform to bypass the financial sanctions imposed by the U.S. and its allies.
“These actions reaffirm the U.S. commitment to limiting Russia’s use of the international financial system to prosecute its war against Ukraine, and to disrupt its efforts to make cross-border payments for dual-use goods and military materials,” said Matthew Miller, spokesperson for the U.S. State Department, in a statement on November 21.
Supporters of Ukraine have urged the Biden administration for months to intensify sanctions on Russia’s banking sector, citing that the Kremlin has found ways to circumvent existing measures, using them to pay for technology imports and dual-use goods that can be used for military purposes.
Beyond facilitating payments for energy, Gazprombank also acts as a channel for the purchase of military goods, and the Kremlin uses it to pay Russian soldiers and compensate the families of fallen troops.
“I am grateful to President Biden and his administration for the strong package of financial and banking sanctions announced today, which target Russia’s economy and war funds,” said Ukrainian President Volodymyr Zelensky on X (formerly Twitter).
As President Biden nears the end of his term on January 20, when President-elect Donald Trump will take office, the U.S. sanctions are coming at a critical moment for Russia’s economy. The record spending on the war has pushed inflation and interest rates higher, with the Russian Central Bank raising its interest rates to 21%, the highest in decades. There are no signs that the war will end soon, and the Russian economy continues to face significant pressure.
